Verona Pharmaceuticals (VRNA: NASDAQ)

Verona Pharmaceuticals (VRNA) is a clinical-stage biopharmaceutical company focused on therapy treatments for respiratory diseases. The US Food and Drug Administration has granted approval to Verona Pharma for its first treatment, targeting chronic obstructive pulmonary disease (COPD), a condition that predominantly affects smokers. This new inhaled non-steroidal treatment for COPD presents a significant market opportunity for Verona.

COPD is a major health concern, affecting around 16 million Americans and ranking as the sixth leading cause of death in the country. Verona’s application was supported by strong efficacy and safety data from two late-stage trials, where Ohtuvayre demonstrated notable improvements in lung function and symptoms, significantly reducing the risk of exacerbation in mild-to-severe COPD patients. BTIG analyst Thomas Shrader estimates that the drug could generate $3.6 billion in peak sales.

Verona Pharmaceuticals is gearing up to commercialize the treatment, with plans to have around 100 sales representatives targeting approximately 15,000 physicians. Chief Commercial Officer Christopher Martin expressed confidence in their ability to execute this plan effectively.

We are bullish on VRNA above $18.00-$19.00, with an upside target of $29.00-$30.00.

United Wholesale Mortgage (UWMC: NYSE)

UWM Holdings (UWMC) is a residential mortgage loan originator based in the United States. The mortgage business may finally be seeing signs of recovery after a challenging 18 months, where rising interest rates hampered refinancing activity and affordability issues affected the home purchase market. With the Federal Reserve nearing the end of its tightening cycle, there’s potential for lower mortgage rates moving forward, which could propel UWMC’s stock price higher.

UWM’s unique and differentiated business model sets it apart from competitors. Unlike technology-driven consumer-direct models used by many peers, UWM operates through relationships with mortgage brokers. These brokers, acting as free agents, can direct borrowers to the best deals available. This model is particularly well-suited to the current purchasing environment, providing brokers with real-time visibility into loan statuses, leading to higher satisfaction among borrowers and real estate agents alike.

The company’s order backlog currently stands at approximately $2.8 billion, including around $108 million in contract additions since the end of February. New contracts include a one-well contract in South Korea for the drillship West Capella, estimated at $32 million, and a six-month contract extension in the U.S. Gulf of Mexico for the drillship West Neptune, valued at approximately $86 million. We are bullish on UWMC above $7.25-$7.50, with an upside target of $11.00-$12.00.